The period of VAT-free electric vehicles is coming to an end: what to expect from 2026

The seven-year period of tax breaks for electric vehicles in Ukraine is coming to an end — starting in 2026, their import will again be subject to VAT and customs duties. This decision has sparked heated debate between supporters of green transport and defenders of budget revenues. Experts predict a temporary increase in prices and a decline in imports, but they are confident that the electric car market will not roll back. Find out how prices, demand and customs clearance conditions will change after the tax breaks end

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On 1 January 2026, Ukraine will end its seven-year period of tax breaks for electric vehicle owners. For the first time since 2017, VAT and customs duties will once again have to be paid on imported electric vehicles. What this means for buyers, importers and the market as a whole is explained below.

Why are the incentives being abolished?

‘Zero customs clearance’ for electric vehicles was introduced back in 2017 to stimulate the market for environmentally friendly transport. Owners of such vehicles were exempt from paying VAT (20%) and customs duties (10%) upon import. These preferences were extended several times, but the government did not include an amendment to extend them in the 2026 budget. Thus, the duty-free import regime will end on 31 December 2025.

The main argument of opponents of the extension is the loss to the budget. According to estimates by the head of the Verkhovna Rada's tax committee, Danylo Getmantsev, Ukraine lost about 14.5 billion hryvnia in taxes in 2025, and according to estimates by fuel market experts, up to 30 billion hryvnia.

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How will the price of electric cars change?

The return of VAT and customs duties will automatically increase the cost of imported cars by 25-30%. For example, if today the Chinese crossover VW ID.4 costs $21,000 less than the diesel VW Tiguan, after the introduction of taxes, the difference will be reduced to $11,000.

However, experts note that even with taxes, electric cars will remain more cost-effective than traditional cars to operate. The cost of electricity for charging and low maintenance costs continue to make them an attractive choice.

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How much has the market grown over the years of incentives?

In the seven years since the programme began, the share of electric cars in Ukraine has grown to almost 3% of the car fleet. According to AUTO-Consulting, the country is among the top 10 European leaders in terms of the number of electric vehicles. In 2025, Ukrainians imported electric cars worth more than $2 billion, which is one and a half times higher than a year earlier.

In September 2025, electric cars became the most popular among new cars for the first time, accounting for a third of all sales — a figure that was unimaginable just a few years ago.

What will happen to imports after 2025

The National Bank of Ukraine predicts that in 2026, the volume of electric car imports will temporarily decline due to rising prices and reduced warehouse stocks. However, a gradual recovery in demand is expected by the end of the year.

Experts are confident that the Ukrainian electric car market has already taken shape, and even without tax breaks, the trend towards electric vehicles will continue. In addition, manufacturers continue to reduce the cost of batteries and expand their range of budget models.

Possible new rules

Instead of ‘zero customs clearance,’ compensation mechanisms may appear in the future — for example, road tax, payment for electricity consumed, or a tax depending on battery power. These measures will balance budget revenues and continue to support ‘green’ transport without creating imbalances in the market.

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